How Brexit and staycations have fuelled the UK’s holiday home rental – and why you should invest

Ownership of investment property involves associated rules and costs that must be weighed up against the projected gains. However, one sector in which landlords can still gain favourable treatment for properties owned in the United Kingdom is the furnished holiday let (FHL) market.

Classified as a commercial operation, FHL homes are not subject to the same tax rules as typical properties rented out privately in the residential sector.

According to Julian Walker, director of Spot Blue International Property, this – together with Brexit uncertainty – has made the sector more appealing to investors hit with higher stamp duties, tighter lending conditions and diminishing mortgage and tax relief benefits of the “increasingly regulated and tax unfriendly buy-to-let market”.

“Spooked by today’s unsettled political climate and fears that a buy-to-let investment could become more of a financial burden than an asset, in particular for part-time landlords, investors are searching for other property sectors where they can protect their capital and grow their pension pot,” he says. “For many, an FHL property, bought with the guidance of a financial adviser, could be an attractive alternative.”

Walker describes buy-to-let housing as “a perennial political football”, and the volume of landlords exiting the market under current legislation is seen as one of the factors responsible for the UK’s housing slump.

In 2016, the government announced that major tax changes impacting owners of second homes, including buy-to-let properties, would be implemented in phases from April 2017 to April 2020.